Home Business News Brits have £250 less disposable income each month than last year as the cost-of-living crisis continues to squeeze household finances

Brits have £250 less disposable income each month than last year as the cost-of-living crisis continues to squeeze household finances

by LLB Finance Reporter
3rd Jan 23 12:23 pm

Brits have on average £250 less disposable income each month, compared to last year – as the cost-of-living crisis continues to squeeze household finances.

The study of 2,000 adults from the saving and investing app Moneybox, found that those who pay rent or mortgages are laying out just over £60 more each month now compared to 12 months ago, while gas and electricity bills have risen by around £100 a month to £248.

And travel expenses have set commuters back over £104 per month more, going from £116 in 2021 to £221 this year.

Personal savings pots have also taken a hit, down 21 per cent in the last 12 months, and three in 10 say they are now living paycheck to paycheck.

However, despite having less cash to spend after bills each month, Brits are doing all they can to plan for the future – with six in 10 managing to continue to save regularly.

In fact, they are still saving and investing the same now as in 2021 – with nearly 20 per cent of their monthly pay-packets being stowed away on average, despite many having to dip into their savings this year.

More than a third (35 per cent) say they have achieved all the financial goals they set for themselves in 2022 and a further 19 per cent are happy with the progress they made towards their goals.

Respondents were able to make progress by cutting back on non-essential spending across the board (38 per cent), going out less (27 per cent), budgeting more (27 per cent) and stuck to a strict budget throughout the year (22 per cent).

Others found ways to earn more money including, selling unwanted possessions (21 per cent), starting a side hustle (18 per cent), working overtime (18 per cent), securing a promotion or pay rise (12 per cent) and even changed jobs to earn more money (11 per cent).

Brian Byrnes, head of personal finance at Moneybox, said: “It’s clear from this research that where possible, people are doing all they can to protect their savings and achieve their financial goals despite personal finances being stretched so much in such a short space of time.

“But of course, not everyone has the flexibility in their budget to plan for the future right now and if that’s the case for you, remember the most important thing you can do for your financial wellbeing in 2023 is build positive financial habits that will set you up for success in the long term.”

The financial crisis appears to have prompted many people to take a fresh look at how they manage their finances and plan for the future.

More than one in four (27 per cent) of those polled via OnePoll made a budget for the first time in the last year.

Four in 10 (41 per cent) have started thinking about how to become more financially resilient in the future and a quarter (26 per cent) are planning ahead more now than ever before.

A third (34 per cent) say they have more control of their finances and 29 per cent feel they are better at managing their money now than before the financial crisis.

Brian Byrnes added: “At one time or another, most of us will admit to not spending enough time managing our finances to help us achieve our future goals.

“Committing to taking some simple steps now to build positive financial habits such as budgeting, regularly reviewing your spending, and setting achievable financial goals, will all help you take control of your future finances and manage the impact of rising costs of living with greater confidence.

“It will also set you on the right path to achieve your goals as quickly as possible in the future.”

Looking ahead to 2023, while one-quarter are yet to set any financial goals for the year, among those who have, it is clear that offsetting the impact of a possible recession is on people’s minds.

As with 2022, building up a rainy-day fund is the top financial goal for the next 12 months, with 34 per cent wanting this safety net in case of further price increases in 2023.

And 30 per cent want to ensure they have enough cash to fall back on in case they run into any job issues caused by the impending recession.

Nearly a fifth (19 per cent) are saving toward a house deposit, and 11 per cent are setting themselves the goal of maxing out their annual Lifetime ISA government bonus in 2023.

And 25 per cent intend to prioritise saving and investing more in 2023.

Nearly three in 10 (29 per cent) are optimistic that if all goes well, they will be able to achieve their financial goals as planned this year and 23 percent feel confident about their financial situation and are focused on long-term opportunities to build wealth.

However, 16 percent feel anxious and nervous about how they will manage their finances in the year to come, while 24 per cent don’t expect their financial situation to change in the coming year.

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